In eDekka LLC v. 3Balls.com Inc., Eastern District of Texas Judge Rodney Gilstrap ruled against plaintiff eDekka’s patent infringement claims and invalidated the patent in question. This jurisdiction has been considered friendly toward so-called patent trolls, and Judge Rodney’s opinion may indicate tougher scrutiny going forward for overly broad patents. The ruling in this lead case dismisses 168 suits filed by eDekka against various defendants.
The Patents
eDekka owns US Patent no. 6,266,674 (hereinafter “the ‘674 patent”), pertaining to “Random access information retrieval utilizing user-defined labels.” Donald J. Hejna, Jr. first filed for the patent in 1992, and it was granted to him in 2001. In 2013, Hejna assigned the patent to eDekka LLC, a Texas-based company. The patent’s abstract describes a device and method for structurally organizing information based upon labels. Additionally, the patent contains images suggesting possible organizational schemes and devices. The ‘674 patent has 52 claims, 17 of which pertain to the data retrieval method and 35 about the device containing the system.
Last year, eDekka gained notoriety by prodigiously filing suits alleging infringement of the ‘674 patent. Many of the targets were retailers with online-based stores, such as Hugo Boss, Fathead, and Forever 21. Defendant in the lead case, 3balls.com, sells new and used golf equipment online. The complaints against these retailers alleged that the “shopping carts” used on their sales websites infringed the ‘674 patent.
Some commentators believe that eDekka’s methodology indicates an attempt to garner quick settlements from defendants seeking to avoid litigation. The ‘674 patent covers a broad concept and thus makes it easy to accuse businesses of infringement. Even if a company doubts the legitimacy of such a patent, it may still capitulate given the time and monetary expense involved in litigation. eDekka’s choice of venue, the Eastern District of Texas, likely served a tactical purpose; the jurisdiction possesses a reputation for patent-holder friendliness.
The Litigation
A 2011 Obama appointee, Judge Rodney Gilstrap presided over the eDekka suits. Previously, Judge Gilstrap had received criticism regarding a docket order that required patent-suit defendants to submit briefs requesting permission to file summary judgment motions, a request potentially at odds with the Federal Rules of Civil Procedure. He adjudicates more patent litigation than any other judge in America.
In an opinion issued on September 21, 2015, Judge Gilstrap granted summary judgment in favor of the defendants, ruling that the ‘674 patent was invalid and that eDekka could not prevail on their infringement claims. The decision covered two separate consolidations of eDekka’s suits, totaling 168 suits in all. The opinion follows a Motion to Dismiss for Failure to State a Claim by defendant Action Envelope and Printing Co, a motion arguing that eDekka’s patent is invalid under 35 U.S.C. § 101. Judge Gilstrap converted Action Envelope’s filing into a motion for summary judgment and found in favor of the defendants.
To assess the validity of the ‘674 patent, Judge Gilstrap turned to § 101 and recent case law about patentable subject matter. Under § 101, “any new and useful process, machine, manufacture, or composition of matter” may be protected by a patent. However, as The Supreme Court has noted in several opinions, “[l]aws of nature, natural phenomena, and abstract ideas are not patentable.” Judge Gilstrap additionally turned to Alice Corp. v. CLS Bank International, a Court decision declaring that merely implementing an abstract idea on an electronic device did not constitute patentable material. The Alice decision gives judges a way to wipe out overly broad patents, but this use has not always been embraced in the Eastern District of Texas.
Judge Gilstrap’s decision scrutinizes the ‘674 patent’s method claims under a two-step “Alice test.” The first prong of this examination, termed the “ineligible concept” step, involves asking if a patent covers subject matter that cannot be protected, like abstract concepts. For this inquiry, Judge Gilstrap focused solely upon the ‘674 patent’s claim 1 and claim 3. Claim 1 describes a method in which user input is received, stored, and labeled as data within a data structure. Claim 3 contains similar language while additionally noting that the system can display the data to the user. Plantiff eDekka argued that, because the patent’s organizational system improved computer data retrieval speed, its patent did not cover an abstract idea. Action Envelope’s motion instead argued that the ‘674 patent’s claims simply seize the abstract concept of storing information. The court agreed with the defendants, reasoning that “the claimed idea represents routine tasks that could be performed by a human.”
Judge Gilstrap continued with the second portion of the Alice test — the “inventive concept” step. At this point, an adjudicator assesses if a patent possesses elements beyond ineligible concepts that would enable it to receive protection. eDekka advanced several arguments regarding the patent’s inventive concepts, namely that the claims relate to a special purpose computer and custom software, and that the claims improve upon alternative methods of data storage. The court declined to follow the defendant’s argumentation, instead finding that the claims “vaguely allude to computer-based activity” and do not contain any actual inventive concepts. This echoes Alice, where the Supreme Court declared that limiting an abstract idea’s use to a computer did not confer patentable status.
The decision succinctly dispensed with the ‘674 patent’s apparatus claims as well, as they essentially mirrored the method claims. Having determined that all of the ‘674 patent’s claims were ineligible for protection, the court found for the defendants. In a separate order, Judge Gilstrap has asked defendants for briefing regarding recovery of attorney’s fees pursuant to 25 U.S.C. §285, which permits prevailing parties to collect attorney’s fees in “exceptional cases.” eDekka has not yet indicated any plans to appeal the decision.
The Effects
Judge Gilstrap hears more patent cases than any other American judge, and with the eDekka decision, he has cleared out roughly 10% of his docket. As previously mentioned, the Eastern District of Texas adjudicates a large volume of patent cases, and many consider it a jurisdiction friendly to non-practicing entities. The eDekka decision may signal change in the district, informing patent-holders that east Texas judges will use the Alice standard when examining patent protection eligibility. Application of this elevated standard would have the effect of discouraging litigation on poorly written, broad patents.
Judge Gilstrap’s request for “exceptional case” attorney’s fees presents perhaps an even stronger method by which judges may discourage frivolous patent suits. Not only would a plaintiff risk having a patent invalidated under the Alice test, they may also face tremendous expense should they need to reimburse defendant’s fees. This effect would be particularly pronounced against high-volume plaintiffs like eDekka. However, some commentators believe that more decisions are needed to fully assess the Eastern District’s direction, especially given that the success rate for patent-holders in the district is still higher than the rest of the country.
